Upcoming Interest Rate Hikes Could Be The Next Big Challenge For Bitcoin, Here’s Why
May 26 2023 - 6:00PM
NEWSBTC
Bitcoin’s (BTC) current sideways price action has left investors
wondering what the future holds for the world’s largest
cryptocurrency. The upcoming interest rate hikes by the Federal
Reserve (Fed) may pose the next big challenge for Bitcoin,
according to the crypto market analysis firm Blofin Academy.
Related Reading: Arbitrum (ARB) Fallout: 70% Price Drop, But These
Charts Reveal Its True Value Is Bitcoin Ready For The Heat Of
Interest Rate Hikes? The US economy has shown considerable
resilience in recent months, prompting the Fed to consider raising
interest rates to prevent inflation. However, this could be bad
news for the crypto market, as higher interest rates tend to make
traditional investments more attractive, potentially leading to a
decrease in demand for Bitcoin and other cryptocurrencies. The
correlation between interest rates and Bitcoin’s price action has
been observed in the past. When interest rates rise, investors tend
to move their money into traditional investment vehicles such as
stocks and bonds, leading to a decrease in demand for
cryptocurrencies. However, it’s worth noting that Bitcoin has often
been viewed as a hedge against inflation, which means that it could
still hold some appeal for investors during times of economic
uncertainty. The next scheduled Fed meeting is set to take
place on June 14, 2023, where the central bank will likely discuss
the possibility of raising interest rates in response to the
current state of the US economy. Macro Determinants Leave
Crypto Traders Waiting Noelle Acheson, owner of the “Crypto Is
Macro Now” newsletter, has cautioned against investors piling into
the crypto market at this time. While the upside potential for
Bitcoin remains significant, Acheson suggests that there is
currently no compelling reason for investors to take on additional
risk. According to Acheson, there are few macro determinants at the
moment, such as debt limit negotiations and Fed rate policy, which
are leaving investors waiting for more clarity before making any
major investment decisions. As a result, there is a sense of
caution in the market as traders wait to see how these macro
factors will play out. Despite the lack of clarity, Acheson notes
that there is not much reason for existing crypto holders to sell
their holdings. This suggests that the current wait-and-see period
is not necessarily a sign of bearish sentiment in the market, but
rather a period of caution as investors await more information.
Acheson also notes that there may be some downside movement in the
near term, but the belief in a potential rally is not strong enough
to warrant the possibility of missing out on any potential gains.
As a result, there has been some buying and selling in the market,
but not enough to significantly increase volatility despite low
volumes and liquidity. At the time of writing, Bitcoin is trading
at $26,700, reflecting a 1.2% increase over the last 24 hours.
However, the 50-day Moving Average (MA) has placed the largest
cryptocurrency in a narrow range between $26,200 and $26,800. This
means that Bitcoin may struggle to surpass its current trading
range in the near term, as the 50-day MA is currently situated at
the upper end of this range on the 1-hour chart, making it a
challenging level to breach. While Bitcoin has experienced some
upside movements in recent weeks, the current trading range
suggests that further gains may be limited until there is a
significant shift in market sentiment or the emergence of a bullish
catalyst. Related Reading: Why This Signal Means Uniswap’s Bear Run
Is Almost Over Featured image from iStock, chart from
TradingView.com
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